India Microfinance

Banex – Nicaragua's biggest MFI files for liquidation

It is expected that in the next few days, the Nicaraguan banking authorities will announce the liquidation of Banco del Exito, known as Banex, until recently the largest Nicaraguan MFI.

Earlier this year Banex, underwent financial restructuring after suffering from severe portfolio deterioration. However, these efforts have not sufficiently stabilized the organization.Several weeks ago, the MFI repaid all of its depositors.

The representative of the Central American Bank for Economic Integration (BCIE) to Nicaragua, Silvio Conrado, said to the media that a team of lawyers from the bank had analyzed legal mechanisms to recover more than eight million dollars invested in Banex, which went into liquidation process last week. In November 2009, MicroRate had announced a country-wide, ratings withdrawal in Nicaragua following serious concerns over the short-term stability of the microfinance sector, fueled by the “No Pago!” (“Don’t Pay!”) movement along with growing political and economic turmoil.

“This intervention by the government is unprecedented. It is too early to tell what level of impact this will have on the microfinance industry in Nicaragua and throughout Latin America,” says MicroRate’s CEO, Sebastian von Stauffenberg.